On October 14, 2026, Palace Hotel Co., Ltd., Kyushu Electric Power Co., Inc. and Craftia Co., Ltd. announced that construction had begun on Palace Hotel Hakone (パレスホテル箱根) at 1245 Sengokuhara, Hakone, Kanagawa. A groundbreaking ceremony was held the previous day, October 13, and the mountain resort hotel — 69 rooms, 12,850㎡ of gross floor area on a 17,450㎡ site — is scheduled to open in autumn 2029. This article converts the published building specifications into floor and land area per room, then sets the 69 rooms against the 126-room project opening in Hakone this December, the existing stock within 2km of Sengokuhara, the seasonality of Hakone’s estimated settled ADR, and MLIT location data to show where the project sits.

Project Overview — Rebuilding a 1960 Hotel Site Inside a National Park

According to the announcement, the Palace Hotel Hakone site is at 1245 Sengokuhara within Fuji-Hakone-Izu National Park. It is the former site of the old Palace Hotel Hakone, which opened in 1960 as the Hakone Kanko Hotel and closed in January 2018 because of building deterioration. The reopening comes after a gap of about 12 years. The hotel will have 69 rooms ranging from 57 to 250㎡ (69 to 271㎡ including rooms with open-air bath terraces), including 6 suites and 5 villas. The building will have four floors above ground and one below, of reinforced concrete with partial steel-reinforced concrete. Design is by Mitsubishi Jisho Design, interiors by Tara Bernerd & Partners, and construction by Kajima Corporation; the owner is Hakone Sengokuhara TMK (a specified purpose company). Facilities will include wellness amenities (spa, pool and fitness) and three food and beverage outlets: an all-day dining restaurant, a lounge bar and a specialty restaurant.

The project is driven by three companies. Palace Hotel Co., Ltd., operator of Palace Hotel Tokyo and Zentis Osaka, brings its brand and hospitality expertise. Kyushu Electric Power, of the Kyuden Group, contributes experience in community development and national park businesses, and Craftia (renamed from Kyudenko in October 2025), also a Kyuden Group company, contributes experience with projects inside national parks. The investment amount has not been disclosed, and this article does not estimate it.

186㎡ of Floor Area per Room — the Same “Floor Depth” as the 126-Room Kowakidani Project

Dividing the published figures by the room count gives 186.2㎡ of floor area and 252.9㎡ of site area per room. These numbers are hard to judge on their own, so we set them beside two higher-priced projects whose supply is confirmed in the same town. One is HOTEL THE MITSUI HAKONE, opening in Kowakidani on December 15, 2026 (126 rooms, operated by Mitsui Fudosan Resort Management, affiliated with Marriott’s The Luxury Collection). MLIT’s Building Construction Dynamics Survey filing records it at 23,600㎡ of floor area with three floors above ground, which works out to 187.3㎡ per room. The other is a 71-room project in Gora listed in the same survey (6,590㎡, five floors, completion scheduled for end-April 2026), at 92.8㎡ per room.

In other words, Palace Hotel Hakone’s floor depth is within 1㎡ of the 126-room project that positions itself at the top of the Hakone market, and almost twice that of the mid-sized 71-room project. Given a minimum room size of 57㎡ (48㎡ at the Mitsui) and a layout with three F&B outlets plus a spa and pool, the design appears to devote nearly half the floor area to common areas and back-of-house rather than rooms. Site area, on the other hand, is in a different league at the Mitsui — about 135,500㎡ (about 14ha), or 1,075㎡ per room — versus 253㎡ per room at the Palace. Fitting 69 rooms into four low-rise floors on a 17,450㎡ site makes it less a “scattered across a vast forest” model and more a “use floor area generously on a limited former site inside a national park” model.

Hakone’s Estimated Settled ADR Averaged ¥26,500 over 12 Months — Peaks in August and November, Trough in June

First, price levels. On MetroEngines Research & Consulting’s estimated settled ADR (property median across five verified property types), Hakone town averaged ¥26,500 over the 12 months from October 2025 to September 2026 (N=170–187 properties), +3.6% from ¥25,600 in the prior-year period. By month, August 2025 (¥29,200) and November 2025 (¥28,900) were the peaks and June 2026 (¥22,700) the trough, a peak-to-trough ratio of about 1.3x. Most recently, August 2026 came in at ¥28,200 (-3.4% YoY) and September at ¥25,900 (+4.7% YoY).

Splitting by property type makes the difference in character clear. Resort hotels (N=27–29 properties) averaged ¥34,000 over 12 months and ryokan (N=138–155 properties) ¥25,700; the town-wide median is pulled toward the thick layer of ryokan. October–December 2026 figures are estimates based on rates listed at the time of the survey, and November, at ¥30,600, already prices in the autumn foliage peak. For the price tiers across Kanagawa including Hakone and the rate gap that opens in autumn, see also Kanagawa Hotel Market 2026: Four Tiers and a ¥15,400 Autumn ADR Gap.

Depth of the High-Price Band — 21 Properties and 404 Rooms at ¥60,000+ in Hakone, None Above ¥100,000

To see how many precedents exist in the price band the 69 rooms are aiming for, we inventoried Hakone town property by property. Ranking the 188 properties and 5,822 rooms with an estimated settled ADR for at least six of the last 12 months by price band, the median is ¥26,400 and the thickest band is ¥25,000–40,000, with 54 properties and 2,301 rooms. The ¥40,000–60,000 band has 28 properties and 1,008 rooms, and the ¥60,000–100,000 band 21 properties and 404 rooms; rooms per property shrink as price rises, and properties at ¥60,000+ average only about 19 rooms each. No property currently exceeds ¥100,000 on an estimated settled basis.

Overlaying the 69 rooms on this distribution, if they sell in the ¥60,000+ band they would equal +17% of that band’s 404 rooms. A 69-room hotel with suites and villas joins a band that small ryokan have carried, which marks a turning point at which Hakone’s high-price band broadens from “small-room-count ryokan” to “mid-sized hotels.” Together with the 126-room project ahead of it, capacity in this band will deepen substantially by 2029.

Narrowing to within 2km of Sengokuhara, three properties with 47 rooms have an estimated settled ADR of ¥60,000 or more: THE HIRAMATSU HOTELS & RESORTS Sengokuhara (20 rooms), Kinnotake Sengokuhara (金乃竹 仙石原, 11 rooms) and Hoshino Resorts KAI Sengokuhara (星野リゾート 界 仙石原, 16 rooms). The ¥40,000–60,000 band has five properties with 86 rooms: Hakone Yuyado Zen (箱根湯宿 然), Hakone Hoshi no Akari (箱根 星のあかり), Hakone Hisui (箱根翡翠), Sengokuro (仙郷楼) and Regina Resort Hakone Sengokuhara. All have built a loyal clientele with rooms featuring private open-air baths, cuisine and distinctive stay styles, showing that high-rate demand already exists within the area. The 69 rooms will join this band of 8 properties and 133 rooms, differentiating on room size and the scale of common areas.

Site Assessment — Floor Area at 73.6% of Site Area Against an 80% Cap in a Low-Rise Residential Zone

Matching the site coordinates against zoning data in MLIT’s Real Estate Information Library places 1245 Sengokuhara within a city planning area, in a Category 2 Low-rise Exclusive Residential zone (designated floor area ratio 80%, building coverage ratio 40%). Dividing the published 12,850㎡ of floor area by the 17,450㎡ site gives a floor area utilization of 73.6%, within the designated ratio. Note, however, that this is an approximate check made by matching national zoning data to coordinates; definitive building conditions must be confirmed with Hakone town’s city planning map and the permits granted.

Land prices are rising. The land price survey benchmark site “1246-718 Rokurobe, Sengokuhara, Hakone” (residential, 925㎡), about 210m from the project site, rose from ¥19,100/㎡ in 2021 to ¥23,800/㎡ in 2026, +24.6% in five years, and the annual change has accelerated each year from -0.5% in 2021 to +3.6% in 2024, +7.5% in 2025 and +10.2% in 2026. The benchmark site’s attributes list Gora Station on the Hakone Tozan Railway as the nearest station at about 7.5km by road, so this is a location that assumes car or bus access rather than rail.

On natural conditions, MLIT zoning data shows the site is in neither a landslide warning zone nor a flood inundation zone, and its liquefaction tendency by landform is classified as “low.” On the volcano, the Japan Meteorological Agency’s “Explanatory Report on Volcanic Activity at Mt. Hakone (September 2026),” published in October 2026, states that seismic activity remained low, volcanic activity was generally calm, and there was no change to the eruption forecast (volcanic alert level 1, be aware it is an active volcano). Fumaroles up to 400m high continue around Owakudani, a precondition that should always be stated alongside any lodging business in Hakone.

A Resident Population of 1,742 Nearby — Demand Comes From Outside the Area

Aggregating MLIT’s National Land Numerical Information 250m-mesh future population estimates within a 2km radius of the site (51 mesh cells), the resident population falls from 1,877 in 2020 to 1,742 in 2025 and 1,395 in 2040 (-25.7% vs. 2020), and the share aged 65 and over had already reached 36.8% in 2025. This is census-based resident population, not visitor or transit population. Hotel demand in Sengokuhara is formed not by local residents but by visitors from the Tokyo metropolitan area and overseas.

On the demand side, Kanagawa Prefecture’s “Reiwa 7 (2025) Tourist Arrivals Survey” shows Hakone town received 21.122 million tourist visits in 2025 (+4.0%, +810,000 YoY) and 4.148 million overnight guests, with both overnight and day visitors up on the prior year. According to press reports, overnight guests grew +4.1%, led by a +27.6% rise in foreign overnight guests. Alongside prefecture-wide overnight guests of 21.27 million (+5.2%), whether this demand base keeps expanding until opening in 2029 will determine how quickly the 69 rooms ramp up.

Supply-Demand Scenario — +5.0% Within 2km, +1.0% for Hakone as a Whole

Turning to supply: within a 2km radius of the site, 64 operating properties with 1,391 rooms had sale prices observed in July–October 2026, so 69 rooms adds +5.0%. Against Hakone town’s 394 operating properties and 7,186 rooms, it is +1.0%. Outside the radius, the 126 rooms in Kowakidani open in December 2026 and the 71-room Gora project is also due for completion in 2026, so Hakone will receive a combined 266 new rooms in stages through 2029, including this project. Because the Building Construction Dynamics Survey is based on building permit applications, these 266 rooms are a floor for projects whose filings can be confirmed today and may rise as further applications are made. Given the price positioning, what the 69 rooms face directly is not the town-wide median but the band of 21 properties and 404 rooms at ¥60,000+ and 28 properties and 1,008 rooms at ¥40,000–60,000. With the 126 rooms and 69 rooms joining it, hotel-scale supply enters for the first time a band that has centered on small-room-count ryokan. For where the preceding 126 rooms fit in Hakone’s price tiers, see Hakone’s 126-Room Luxury Supply: Listed +30.9%, Settled ADR +5.7%.

Barring a major structural change in demand, the 195 rooms from the Kowakidani 126 and this project’s 69 joining the ¥60,000+ band would take its room count from 404 in 2026 to around 600 by autumn 2029, about 1.5x (the Gora 71-room project is excluded because its price band has not been disclosed). As supply increases, the axis of differentiation is likely to shift from “whether rooms have private open-air baths” to “the common-area experience (spa, pool, three F&B outlets) and the brand’s customer base,” and 186㎡ of floor area per room is consistent with that direction. With three years until opening, the price and occupancy trajectory of the preceding 126-room project in 2027–2028 will be the most direct reference point for gauging the 69 rooms’ pricing.

J-REIT Holdings in Hakone and Odawara — Acquisition Prices of ¥25.8mn to ¥43.6mn per Room

From an investor’s perspective, it is worth checking existing transaction levels around Hakone. Among properties held by the seven listed hotel REITs, three are located in Hakone or neighboring Odawara. Japan Hotel REIT Investment Corporation (8985) acquired Hakone Gora Onsen Toki no Yu Setsugetsuka (箱根強羅温泉 季の湯 雪月花, 158 rooms) for ¥4,070mn, about ¥25.8mn per room; Hoshino Resorts REIT (星野リゾート・リート, 3287) acquired KAI Hakone (界 箱根, 34 rooms, acquired July 2013) for ¥950mn, about ¥27.9mn per room; and MORI TRUST REIT (8961) acquired Hilton Odawara Resort & Spa (163 rooms, fixed rent) for ¥7,100mn, about ¥43.6mn per room. Japan Hotel REIT and MORI TRUST REIT do not publish property-level acquisition dates in their portfolio lists, so acquisition timing is not compared. All were acquired before construction costs rose and do not directly indicate the level of current new-build projects, but they confirm that Hakone lodging has a track record as an institutional investment holding. The structure behind the ¥390mn-per-room appraisal of a luxury inn in Gora and the REIT’s TK investment and preferred equity is analyzed in detail in Hakone Gora Ryokan Appraised at ¥390mn a Room: REIT Equity, 184 Keys.

Source: Hilton, “Company Overview” (updated August 25, 2026)

Conclusion

Because Palace Hotel Hakone broke ground without disclosing its investment amount, this article does not address yield and instead positions the project using published specifications and market data. Supply of +5.0% against the existing 1,391 rooms within 2km of Sengokuhara is limited, yet by price band it is large enough to change the structure of Hakone’s high-price segment. Together with the trajectory after the 126 rooms open in December 2026, Hakone’s rate formation through autumn 2029 is worth tracking.

Frequently Asked Questions

Q. When will Palace Hotel Hakone open?
A. It is scheduled to open in autumn 2029. A groundbreaking ceremony was held on October 13, 2026, and construction has begun.

Q. What was the predecessor hotel?
A. It opened in 1960 as the Hakone Kanko Hotel, operated as Palace Hotel Hakone, and closed in January 2018 because of building deterioration. The new project rebuilds on the same former site at 1245 Sengokuhara.

Q. Have the investment amount or room rates been disclosed?
A. Neither had been disclosed as of the October 14, 2026 announcement. The price bands in this article refer only to the distribution of estimated settled ADR at existing properties in Hakone.